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Growth In Wage Rates And Employment

Labour Cost Index and Quarterly Employment Survey: June 2001 Quarter

Figures for the June 2001 quarter from Statistics New Zealand's Labour Cost Index show growth in ordinary time wage rates. Quarterly Employment Survey figures, also released today, show growth in employment, hours and earnings over the same period.

Salary and ordinary time wage rates, as measured by the Labour Cost Index (LCI), increased 0.5 per cent in the June 2001 quarter, following a 0.5 per cent increase in the March 2001 quarter. These quarterly increases are higher than the average quarterly increase over the past eight years. Overtime wage rates increased 0.5 per cent in the June 2001 quarter and salary and wage rates (including overtime) increased by 0.4 per cent.

On an annual basis, salary and wage rates (including overtime) were 1.8 per cent higher in the June 2001 quarter than in the June 2000 quarter.

LCI private sector salary and ordinary time wage rates rose by 0.5 per cent in the June 2001 quarter and are now 1.9 per cent higher than a year earlier. This is the highest annual increase since the March 1998 quarter when an increase of the same size was recorded.

Both the size of private sector increases and the proportion of pay rates increasing have been edging higher. Forty-seven per cent of private sector ordinary time pay rates increased from the June 2000 quarter to the June 2001 quarter, which is the highest proportion in more than three years. Of the private sector ordinary time pay rates that rose from the June 2000 quarter to the June 2001 quarter, the average annual increase was 3.9 per cent (the highest level for three years).

LCI public sector salary and ordinary time wage rates rose by 0.3 per cent in the June 2001 quarter and were 1.6 per cent higher than a year earlier. The latest annual increase is the smallest since the September 1999 quarter, as increases in 1999 and 2000 for school teachers have now dropped out of the annual movement.

For ordinary time pay rate increases during the past year, "matching market rates", "retaining staff" and "attracting staff" were major reasons given by employers for larger increases. Overall, one in three increases was to match market rates, retain staff or attract staff. While, three in five increases of more than 5 per cent were for these reasons, they were cited in only one in five cases for increases of up to 2 per cent. Annual increases of more than 5 per cent have become more common. One in 11 rates increased by this amount in the year to June, the highest proportion for three years.

The Labour Cost Index measures changes in salary and wage rates for a fixed quantity and quality of labour input. By comparison, Quarterly Employment Survey (QES) average earnings statistics reflect not only changes in pay rates, but also compositional and other changes.

QES results for the May 2001 quarter show an increase in employment, with full-time equivalent employees (FTEs) increasing by 1.1 per cent. Full-time and part-time employment increased by 1.2 per cent and 0.9 per cent in the May 2001 quarter. Seasonally adjusted total paid hours and total gross earnings also rose in the May 2001 quarter, by 1.9 per cent and 2.8 per cent respectively. In the year to May 2001, seasonally adjusted total paid hours rose by 4.0 per cent and seasonally adjusted total gross earnings by 7.5 per cent.

QES average total hourly earnings for the May 2001 quarter were $18.28, a quarterly increase of 0.9 per cent from the February 2001 quarter. In the year to May 2001, average total hourly earnings increased by 3.3 per cent.

QES private sector average ordinary time hourly earnings increased by 0.8 per cent in the May 2001 quarter and 3.5 per cent in the May 2001 year.

Private sector QES average ordinary time hourly earnings and private sector LCI salary and ordinary time wage rates have both recorded relatively strong increases for each of the latest two quarters.

Brian Pink Government Statistician

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